Retail inflation eases to three-month low of 6.77%
NEW DELHI: Retail and wholesale inflation slowed for the month of October, suggesting that they may have peaked.
Retail inflation, as measured by the Consumer Price Index fell to 6.77% in the month of October from its September print of 7.41%, as per data released by the National Statistical Office (NSO) on Monday. The latest inflation number is in line with a forecast of 6.7% by Bloomberg poll of economists. It also vindicates Reserve Bank of India (RBI) governor Shaktikanta Das, who, while speaking at the Hindustan Times Leadership Summit on November 12 said that the October Consumer Price Index (CPI) reading would likely be lower than 7%.
In another set of statistics released by the Union ministry of commerce and industry, wholesale inflation fell to 8.4% in October. WPI was in double digits for 19 consecutive months before this .
Analysts underlined the need for persisting with a vigilant attitude on part of RBI, despite the cooling in inflation. This argument has merit, given the still elevated levels of food, especially cereal inflation and uncertainty in global prices, including in the fuel market. Both food and fuel prices are relatively immune to monetary policy interventions, and therefore will continue to test the efficacy of inflation targeting regime in the country. The price of India’s Crude Oil Basket (COB) stood at $92.4 per barrel on November 11 which is higher than the monthly average price of $90.71 and $91.7 in the months of September and October.
Retail inflation rose for two consecutive months and reached a value of 7.4% in the month of September. The latest moderation in CPI was widely expected and RBI sees this as the beginning of a moderation in inflation levels. The latest Monetary Policy Committee (MPC) resolution of the RBI — it was published on September 30 — has projected CPI growth of 6.5% and 5.8% in the quarters ending December 2022 and March 2023.
Reacting to the latest retail inflation figure, the Union finance ministry said: “The headline inflation rate based on the retail Consumer Price Index #CPI recorded a decline from 7.41 per cent in September 2022 to 6.77 per cent in October 2022. The significant decline in retail inflation is mainly due to a decrease in food price infla